Justices Rosenberg, Greer and Howden of the Ontario Court (General Division) have reversed the Ontario Municipal Board and have given guidelines with respect to the valuation of Aggregate Pits (612118 Ontario Limited vs. Ministry of Transportation (1998), 64 L.C.R. 5).

The claimant owned 191.94 acres which she bought under Power of Sale in 1986 for $385,000.00. The lands had previously been designated, zoned and licensed for aggregate extraction.

On August 12, 1991, MTO expropriated an irregular parcel of 11.02 acres to construct a new ramp for an existing interchange between Regional Road 20 and Provincial Highway 115. The effect of the expropriation was to sever from the claimant’s lands another irregular parcel of approximately 3.045 acres.

The lands expropriated and the severed parcel were in areas 1 and 2 of the claimant’s four areas of extraction.

The OMB awarded compensation for the expropriated parcel in the sum of $896,932.00 and injurious affection attributable to the cost of route elongation and maintenance of a truck haul route in the sum of $10,466.00.

The Divisional Court disagreed with the Ontario Municipal Board which had applied Section 14(3) so as to take a before and after approach to the valuation. The Divisional Court disagreed that the size, shape and nature of the area expropriated was such that there was no general demand or market for it.

The Divisional Court also felt that there had been an error by the Ministry’s appraiser in that he did not determine the market value of "the whole of the claimant’s land", but only of Parts 1 and 2 leaving Parts 3 and 4 out of his analysis.

The Divisional Court noted that extraction is dependant on the market available and not the capacity to extract aggregate. The Divisional Court held that the OMB had erred in valuing the parcel as if the aggregate would be extracted immediately. There was no evidence that indicated that the aggregate in the expropriated parcel was more valuable than any of the other aggregate owned by the claimant.

The Divisional Court considered and adopted as the proper method of valuing this sort of property the decision of the Ontario Municipal Board in Strecker vs. Ministry of Transportation (1992), 49 L.C.R. 90.

Applying these principles, the Divisional Court directed that a new panel of the OMB should determine the value of the aggregate in areas 1 to 4 and the extraction rate before making a determination with respect to the value of the aggregate in the area acquired. There was no Order as to costs.

This article appears in the OEA FALL 1998 NEWSLETTER